What is a Charitable Remainder Trust?

Trusts are gaining popularity among Americans because of how much easier it is to have finances and other assets handled by professional trustees. Of all the trusts available, a charitable remainder trust is among the top choices.

In addition to managing your finances for you, having a trust can also reduce high property taxes whether it is a community trust, family trust, living trust, or any other kind of available trust.

Charitable remainder trusts encourage people to make charitable donations while offering professional management of financial assets. Most schools, churches, and non-profit organizations have their own charity trusts. The types of charitable remainder trusts are annuity trusts and uni-trusts, which are described in further detail below.

The more popular option between the two is the annuity trust. A fixed amount is paid each year to the charity and trustor. The length of the trust can be 10, 20, 30 years or you can even go with a lifetime trust, in which case the remaining trust balance goes to the charity upon the death of the trustor. Another common feature of annuity trusts is the amount is normally fixed, meaning it never changes throughout the entire term.

While the above type of charitable remainder trust is perfect for those wanting the simplest trust available, those seeking some more flexibility may find the uni-trust much better suited to them. The way it works is the value of the trust's assets is re-evaluated on a yearly basis, making the payment amount calculated change with it.

There are a number of ways a donor can adjust a term to best suit their needs, such as the term length and types of assets they contribute to the trust. Some of the commonly contributed assets besides cash include stocks, bonds, real estate, and other types of property.

Any and all donors can make use of a charitable remainder trust and reap the supplementary benefit of better financial management. Seek a well informed estate planning professional to see how the implementation process works.